A Reinvestment Zone is a defined geographic area created by a local government to make a property eligible for certain economic incentives, most commonly tax abatements under Texas law.
A reinvestment zone does not reduce taxes by itself, but it is a required first step before a county can even consider a tax abatement.
What a reinvestment zone does (in simple terms)
Think of a reinvestment zone as turning a switch from “not eligible” to “eligible.”
By creating the zone, the county is saying:
“This specific area may qualify for incentives if a future agreement is approved.”
Important:
Creating a reinvestment zone does not approve a project, does not grant an abatement, and does not guarantee anything beyond eligibility.
Why reinvestment zones matter so much
While a zone doesn’t grant tax relief on its own, it dramatically changes the path forward:
- Without a reinvestment zone → no abatement is legally possible
- With a reinvestment zone → abatement negotiations can begin
This is why many residents view zone creation as the most important early decision in the entire process.
What the county must do to create a zone
Under Texas law, the county must:
- Clearly define the boundaries of the zone
- Make findings that the area qualifies (typically underdeveloped or would benefit from development)
- Act in a posted public meeting
- Record the action in official minutes
A reinvestment zone cannot be created behind closed doors.
Does the company have to own the land?
No.
A reinvestment zone can be created even if the land is only under contract and not yet owned by the developer.
This is common practice — but it’s also why timing matters.
Creating a zone early can significantly reduce the developer’s risk before they’ve committed capital.
How reinvestment zones relate to tax abatements
A reinvestment zone is the gateway to a tax abatement.
You can’t have an abatement without a zone — but you can have a zone without ever granting an abatement.
For a full explanation of abatements, see:
Reinvestment zones and leverage
From the county’s perspective:
- Before a zone exists:
The county has maximum leverage. - After a zone exists:
The developer’s path becomes easier and cheaper. - After an abatement is granted:
The leverage is gone.
This is why many residents ask the county to be cautious about creating zones too early.
Common misconception
“Creating a reinvestment zone doesn’t really matter — the real decision is the abatement.”
In reality, the zone is often the decision that determines whether an abatement becomes likely.
How this connects to PILOT payments
PILOTs (Payments In Lieu Of Taxes) are usually discussed after a reinvestment zone exists and in connection with a tax abatement.
You can read more here:
Key takeaway
A reinvestment zone doesn’t approve a project or reduce taxes — but it opens the door for incentives that may permanently change the county’s tax structure and leverage.